Managing my credit limit myself

codek

Hi,

My credit limit has crept up and up, and is now at a level which i'm never ever going to use.

Is it wise of me to ask them to reduce it? If I do reduce the limit, will that be looked on positively or negatively on my credit record?

I have heard that some mortgage companies are now looking negatively on people who have "too much" available credit. I want to ensure I stay out of that window.

Many thanks!
Dan

YorkshireBoy

Impossible to answer (or, more accurately, to guess/pass opinion) without knowing more about your personal circumstances. However, in my experience mortgage providers are only concerned with 'actual' debt (used credit)...not 'potential' debt (available credit).

codek

My actual debt is zero, barring the mortgage itself. I wondered, given that, whether they'd then dig elsewhere for things to bring up.

I can't remember where i read about the available debt thing, has no one else seen this? maybe I misread it!!?

sarahs999

It is true that having too much available is sometimes something CC providers look at. I'm looking at reducing mine too; I have £40k of available credit which is just stupid. I only have £6k on cards.

What I'm about to do is call round my least favourite cards first and ask them if they have any offers available (as I'm about to need a new BT for 0%). If they won't give me anything I'm going to close down three or four of the cards (often they'll give you something extra if you really make it clear that you are giong to close and aren't just pretending...). If none of them give me anything I'll get one from someone else after I've closed down all the others, thus reducing my available credit.

lisyloo

My feeling is that mortgage providers will be less bothered than credit card providers.
This is just my opinion but there is some logic to it.

Mortgage lenders secure the debt you have on your house.
If you get into difficulties they have the house as security and importantly they have a FIRST charge, so they can get their debt settled first in the event the house is repossesed.
They base their lending decision on the value of the property and they would want to see successful management of debt, but they are not too bothered about other potential debts becuase they have a FIRST charge. They may be bothered about actual debts from an affordability point of view, but available credit is not important to them.

Credit card companies on the other hand do not have any security.
Therefore they are going to be more interested in your available credit.
Becuase if you do get into difficulty then they have no preferential position as regards getting paid.

So I think it's different depending on whether you are looking at getting a mortgage or credit card.

codek

I See; I'm only bothered about making sure my mortgage company sees us favourable. I'm not bothered about CC providers.

But also; I do feel uncomfortable about such a high limit, from a fraud perspective, even though i know that would be their responsibility!

lisyloo

I would reduce the limit then.
Your mortgage lender will be much more interested in your income(s), the value of the house, you actual debts/outgoings and a good payment history.